World View & Market Commentary. Forest first; Trees second. Focused on Real & Knowable facts that filter through the "experts" fluff and media hyperbole. Where we've been, what the future may hold and developing a better way forward.

First I want to comment that there are many indicators suggesting that a pretty major top in equities is either in or approaching. I posted comments from McHugh inside of today’s Daily thread for those who are interested, keep in mind that the markets are NOT real, they are a manipulated illusion with the rule of law no longer enforced.

JPMorgan met earnings expectations but income was down 23%, poor bastards, they “only” “earned” (stole) $3.7 Billion! Not enough, their stock is down sharply, LOL. What a screwed up game.

More talk about downgrades coming, that is also pressuring sentiment. Of course that’s all just a racket of self-interest too, completely devoid of reality.

The Trade Deficit for November came in larger than expected. That will drag on GDP calculations, and notably it was our exports that were weak… tie that piece of information with Export Prices which just fell by .5%, and you can see that there’s trouble brewing, not that Econodream can see it:

HighlightsIn November, the U.S. trade deficit widened sharply in November due largely to a jump in oil imports but also due to a dip in exports. The trade gap grew to $47.8 billion from $43.3 billion in October (originally $43.5 billion). The latest shortfall was much more negative than the consensus forecast for $45.0 billion. Exports declined 0.9 percent after dipping 0.7 percent in October. Imports rebounded 1.3 percent in November, following a 1.0 percent decline the prior month.

The worsening in the trade gap was led by the petroleum gap which expanded to $27.6 billion from $24.2 billion in October. The nonpetroleum goods deficit widened to $34.8 billion from $33.2 billion the month before. Several factors were behind this, including a drop in exports of nonmonetary gold and a boost in automotive imports. The services surplus was slightly improved at $15.4 billion from $15.3 billion in September.

On a not seasonally adjusted basis, the November figures show surpluses, in billions of dollars, in part with Hong Kong $3.2 ($3.0 for October), Australia $1.5 ($2.1), and Singapore $1.0 ($1.0). Deficits were recorded, in billions of dollars, in part with China $26.9 ($28.1), the European Union $9.7 ($8.0),OPEC $9.1 ($8.3), Japan $6.2 ($6.2), Mexico $5.5 ($5.3), Germany $4.7 ($4.3), and Canada $3.0 ($2.2).

Today's report is moderately complex. You cannot attribute the huge worsening to any one fact. Due to special factors, it is very likely that the November number will be partially reversed soon and significantly. Exports of nonmonetary gold have been volatile recently. The surge in oil imports cannot continue at that pace. And the jump in auto imports probably was just American auto companies taking delivery of production in Canadian facilities outside of Detroit. So, economists will be shaving their forecasts for fourth quarter GDP but underlying trends appear to be changed only very slightly with weakness in exports to Europe likely real but not that significant.

Import and Export Prices for December are both negative, and the year over year figures are still high but coming down. Here’s Econoclueno:

HighlightsA monthly dip in petroleum prices helped pull down import prices by 0.1 percent in December. Excluding petroleum which helps smooth out monthly distortions, import prices rose a very mild 0.1 percent following 0.2 percent declines in the prior two months. Price pressures of imported finished goods rose but only slightly to still subdued monthly rates of 0.2 percent for both imported capital and imported consumer goods. Prices for imported vehicles rose only 0.1 percent.

There's also no trouble on the export where prices fell a steep 0.5 percent in the month following a 0.1 percent gain in November and a 2.0 percent fall in October. Prices of agricultural exports swung lower in December after swinging higher in November and lower in October.

Waves of inflation, waves of deflation, but the overall trend is inflation. We may see another bought of deflation here, but yes, it will be met with more… bigger numbers, more frequent and significant other events.

Again, let’s look at the Shadowstats “Growth” chart… this time I want to point out the waves – waves of inflation, waves of deflation. In this case, however, the trend is for lower growth, that is due to macroeconomic debt saturation:

Again, I will post a chart of M1 – just exponential math creating a parabola of increasing numbers, this is what cements the power for those who wrongly are allowed to produce money from nothing:

Thursday, January 12, 2012

Equities are mixed this morning after an overnight spike that appears to be a manipulated attempt to force the market over key resistance… that attempt has so far failed. The dollar is lower, bonds are flat, oil is higher, gold continues its impressive move higher, and unfortunately food is moving higher as well.

Weekly Jobless Claims rose right back to the 400k level, reported at 399,000 for the past week, a 7.3% jump from the prior 372k. Note how Econoday says this was a 24,000 jump, when in fact it was an increase of 27,000 over the prior report… here they subtract the 3k revision higher to make it sound better than it was, but they do the exact opposite when numbers are in the other direction, always trying to make it sound better than it actually is:

HighlightsThe long sweep of improvement in initial jobless claims hit a bump in the January 7 week, up a very steep 24,000 to 399,000. The goods news is that claims are still under 400,000 for a ninth time in 10 weeks. But otherwise the data, which the Labor Department stresses is free from special factors, point to a step backward for the jobs market with the four-week average, up a sizable 7,750 to 381,750, ending five straight weeks of improvement (prior four-week average revised to 374,000). Details also include a 3,000 upward revision to the December 31 week to 375,000.

Continuing claims also rose, up 19,000 in data for the December 31 week to 3.629 million. Here the four-week average is unchanged at 3.605 million with the unemployment rate for insured workers also unchanged, at 2.9 percent.

Though the data are clean from special factors, the first week of the year is typically the highest week for claims. This factor brings into play seasonal adjustment questions. Still, today's report is a disappointing start to the January employment picture.

As if any of the jobs numbers are even close to reality… they aren’t.

The Retail Sales report disappointed as well, coming in at .1% in December versus the .2% prior month and .4% expected. First, let me ask you how that .1% increase compares to all the massive hype around the Christmas shopping season? Remember all those supposed records set? Mobs breaking down doors with people running each other over? Was that reality or just spin?

Here’s the spin:

HighlightsDecember retail sales advanced but less than expected but part of the slowing was due to upward revisions to November and October. Retail sales in December edged up 0.1 percent, following a 0.4 percent rise in November (originally up 0.2 percent) and 0.7 percent gain in October (previously up 0.6 percent). The December figure came in lower than the consensus forecast for 0.4 percent. Excluding autos, retail sales actually fell 0.2 percent in December after increasing 0.3 percent in November (originally up 0.2 percent) and increasing 0.5 percent in October (previously up 0.6 percent). The market median forecast was 0.4 percent. Gasoline sales dropped 1.6 percent after a 0.9 percent increase in November.

Sales excluding autos and gasoline in December were flat, following a modest 0.2 percent increase in November (originally up 0.2 percent). Econoday's survey panel now includes a consensus for this series which was 0.4 percent for December. Within the core (excluding autos and gasoline), gains were led by building materials, clothing, and food services & drinking places. Weakness was led by a drop in electronics & appliance stores.

Retail sales on a year-ago basis in December posted at up 6.5 percent, compared to 7.0 percent in November. Excluding motor vehicles, sales were up 6.0 percent on a year-on-year basis, compared to 6.8 percent the prior month.

Today's report is disappointing but hardly a disaster. Consumers are still spending and front loaded a bit in November. But some subsectors apparently did a bit of price discounting (likely electronics among others) and we may see that in quarterly earnings.

On the news, equity futures dipped somewhat as initial jobless claims also were a little higher than expected.

Retail Sales are massively overstated. Raw Retail Sales are measured in dollars. Retail Sales measure sales only at stores open for the past year – they fail to account for stores that have closed. These two errors are huge.

Once again for a picture of reality we turn to Shadowstats where John Williams has produced the following chart correcting for true inflation – the reality is so far from the hype it’s not even funny. What it is is sad, embarrassing, and pathetic. Real Retail Sales, according to his corrections, have been negative since about 1992, 20 years ago! And his chart doesn’t account for substitution bias which makes this even worse:

Once again, money printing/ credit creation do not equal productivity or employment once you are past the debt saturation point. Yes, you can make dollar denominated statistics appear as if they are moving higher, and you can also lie and fail to account for all the printing in your statistics… but the disconnect between reality and the spin is growing massively by the day. So much so, that I think there are very few who believe it anymore, and that is exactly what loss of confidence is all about – it follows the breakdown of the rule of law.

Wednesday, January 11, 2012

Equity futures are lower this morning, with the dollar regaining the past two days losses, the Euro resuming dive trajectory, bonds higher, oil lower, gold & silver mixed, and most food commodities lower.

The only data of the day comes from the immoral, hypocritical, narcissistic shysters at the Mortgage Banker’s Association. In complete complicity, here’s Econosayanythingtokeepmakingabuck:

HighlightsAfter three weeks of very steep declines, the purchase index jumped 8.1 percent in the January 6 week. Despite the jump, the four-week average is down 2 percent and signals moderation for housing sales which had been picking up through November and October. The refinancing index rose 3.3 percent with the four-week average down 0.5 percent. Rates mostly edged higher in the week with the average 30-year conforming loan (under $417,500) up four tenths to 4.11 percent. Watch for comments on the housing sector this afternoon in the Beige Book.

Whatever, can’t wait until these types of criminals cash in their karma value miles.

With so little meaningful, much less real, data out there, let’s stay focused on the big picture and let the little noise makers and central banking minions make their noise…

In yesterday’s Daily Thread commenter “SeattleBruce” posted a chart from Shadowstats showing a comparison of the official GDP versus the Shadowstats estimate using data the way it used to be collected. Ignoring the fact that GDP is grossly overstated for several other reasons, at least John Williams recreates statistics that are comparable to the past. In this case he uses real deflators based on inflation data calculated the way it was pre-Clinton era.

But what I want you to notice in the chart is not the absolute values, no, what strikes me is the trend which is clear:

Two trends actually. One trend is that over the long time frame the government reported data is diverging further from measurements that are closer to reality – this trend is seen across the spectrum of reports and is not surprising. More significantly, the primary trend is down and the more correct data is trending down at a steeper angle. This, I believe, clearly shows the effects of Macroeconomic Debt Saturation. The effect is the same effect as the fall of Velocity, and that found on the Diminishing Returns of Debt chart.

GDP measurements first measure in dollars, then use a “deflator” to make those measurements “real,” that is to correct for inflation. But compared to the supply of money, the corrections are puny to say the least – the reason is that in our current narcissistic run economy, money is debt. Thus the disconnect between the money supply and “growth…” Below is a chart of M1, compare that trajectory to the GDP trajectories above:

M1:

So we don’t really have REAL “growth,” we have money creation which is really debt creation, that’s why the money trajectories are so high and must go higher… the debt strangles the real economy, and the creation of more debt as a “stimulus” only works to strangle it further.

There’s only one way to return to a truly productive economy, and that is to create sovereign money without debt wrongly owed to private individuals.

What remains of the “markets” is technically diverging from reality – there are several indicators in divergence, typically found at tops. Buyers beware.

Tuesday, January 10, 2012

Equity futures are soaring, the dollar is down, bonds are a little lower, oil is roaring higher of course, gold & silver are rising strongly of course, and food commodities continue to gag, but are mixed this morning.

The NFIB Small Business Confidence Index gained 1.8 points to reach 94.1, it was the fourth gain in a row. Here’s how the NFIB, whose commentary is usually pretty level, describes the past year for small businesses:

From the perspective of NFIB owners, 2011 was a flat year at best. The Index of Small Business Optimism stood at 94.1 in January and ended the year at 93.9, after dipping as low as 88.1 in August. The best that can be said is that the year ended on an upbeat, with 4 months of improvements. Eight of the ten Index components did end the year higher, the spoilers were Expected Business Conditions in 6 Months, which ended the year 18 points below January readings, and Expected Real Sales Volumes which ended 4 points lower. So, an index that excluded these expectations variables would have ended the year a bit higher.

In yesterday’s report I made two errors that need correcting. The first is that I referred to M1 rising 31% in the past year when what I meant to say is Base Money rose by that amount:

Base Money:

In fact M1 was up about 17% over the past year:

The other is that I posted the wrong chart when discussing the percent change in CPI, the correct chart is below, and indeed it shows the advertised 3.4%, when yesterday’s chart was showing the change in the index. My apologies…

Monday, January 9, 2012

Equity futures are up… while I hate to assign a reason other than massive money from nothing and manipulation, the media chimps are touting more meetings in Europe as the reason, LOL times several trillion. The dollar is lower, bonds are slightly lower, oil is lower, gold & silver higher, and food commodities are higher… as if they weren’t already high enough to choke a horse.

There is very light economic “data” (misinformation and lies) this week, and none to be reported today.

I must say that to my thinking we are caught in a central banker induced Ground Hog Day. Indeed, we are trapped by their debt as money to control you – this creates an environment where it is very difficult for the populace to take the steps necessary to change it. Their jobs, their homes, their healthcare, their children all depend on supporting a now completely corrupt system. Thus there will be no real or meaningful changes in the near term, just talk, lies, platitudes, meetings, and more money from nothing to enslave the world schemes.

Of course in the background the real cost of food soars, the cost of education soars, the cost of energy soars, the cost of healthcare soars – the things you NEED soar in price, while the things you hold as “assets” deflate or at best hold steady on paper but lose massively in real terms. Of course incomes are stagnant while unemployment rages against a backdrop of manipulated numbers and more lies.

So we wait for the “other events” to occur because we are too captured to take matters into our own hands. But sooner or later the disconnect will catch up to all of us… it’s creeping at us from the margins, you can see the tent cities growing, you can feel and sense the disconnect. People may not be able to verbalize it, but the population is on edge, heads are on a swivel as most sense that something’s not right – they instinctively know that “other events” are on the way. Thus we look to the news and wonder… will Iran execute that American spy, and will we react?

My take is not yet, it’s an election year, silly! Obama can’t allow a war to start when he’s taking credit for “ending” the war in Iraq. Thus the Iranians could do almost anything and it will be ignored, for now. Wars start at times when it’s politically expedient to do so. If a central banker’s puppet, I mean President, is viewed as weak, then he will have to flex his muscle to up his ratings with “conservatives” who don’t think for a second about what it costs America in terms of real freedom or in how it indebts our people to the central bankers, thus enslaving us. Bankruptcy and debt slavery is not security, it is not freedom.

But then again, what do I know? War could break out this afternoon; the inequities in the world are ripe for those other events.

Debt saturation has killed any real growth, and for now we are just another Japan. M1 was up 31% last year, bet your income wasn’t anywhere near that. Last reported inflation, meanwhile, was 3.4% year over year on the CPI – as if that is acceptable and not mathematically horrendous over time. And yet if we look at the “Fed’s” own charts, year over year overall CPI is currently running 7.5% - but where are those reports in the media?

CPI Percent Change Year over Year:

Note on that chart that only once since the 1950’s has reported inflation been negative. Of course these numbers are trumped and have no comparison across time as they have been manipulated and massaged with the sole purpose to distort reality and your perception of it.

Of course none of the reality matters until it does. And so it goes… rehashing the hash, but you cannot escape the math.